China Sourcing How-To: Qualifying Suppliers
April 12, 2019
We are the age of information. All of it is readily available at your fingertips. And for many, the problem is no longer finding suppliers, but rather, qualifying suppliers.
We previously wrote about how to verify factories about a year ago in May 2018. See China sourcing: How to verify factories. Since this blog, new importers continue to ask – how?
While there are many steps in qualifying factories and each situation may require different solutions, we can generally break down the steps to three things: A, B, and C.
A – Actuals: Do your research. You can use platforms like Alibaba, Global Sources, and Made-In-China.com. You want to find the facts and many of these platforms offer just that – facts. Where the factory is located, who owns it, etc. Some platforms, like Alibaba, offer a list of banned suppliers and preferred suppliers, which could also be useful. But you don’t want to base your entire research on these classifications. Instead, gathering facts from these types of internet searches provides a point of reference and allows you to compare other information you find about the supplier.
B – Business licenses: Armed with the information obtained through your internet search, you can request the supplier’s business license from China’s AIC (Administration for Industry and Commerce). Every supplier is required to register their business and provide basic information that would help you verify whether or not they are legitimate. This business registration certificate will include basic information such as:
- Registration Number
- Official Company Name
- Company Type
- Registered Address
- Legal Representative
- Registered Capital
- Date of Establishment
- License Expiry Date
- Business Scope
- Registration Bureau
C – Conditions: You’ll need to make it clear to the supplier that your relationship with them is conditional. Below is a list of requirements or conditions that suppliers should generally agree to:
- Suppliers should provide samples
- Products and samples must adhere to specifications provided (See this blog about PSS)
- Suppliers are aware of and agree to various inspections: pre-production, during production, post-production, pre-shipment, etc. Whatever works best and is necessary for you and your business.
There may be other steps in qualifying factories that would be specific to certain industries or products. We encourage importers to cover all bases and create procedures that work for them, as there is no one-size-fits-all solution. Some importers may also want to perform audits or arrange factory visits.
What additional steps do you take to verify factories? Share your suggestions with us in the comments below.
By Jocelyn Trigueros